Microsoft to get $444 million from Android patent licensees

Microsoft signed a major licensing agreement with Samsung yesterday over the use of some of its mobile patents on Android phones and tablets. The deal followed a string of similar agreements with other manufacturers looking to avoid a battle in court, requiring a fixed fee is paid for every Android device sold. So how much is Microsoft making from these arrangements? According to a note from Goldman Sachs's tech analyst team, around $444 million per year.

Goldman estimates that Microsoft is getting $3-$6 per Android device sold, and calculated the multi-million figure based on the number of Android devices expected to be sold by Microsoft's licensees between July 1, 2011 and June 30, 2012. These companies include HTC, Acer, U.S. defense contractor General Dynamics Itronix, Onkyo, Velocity Micro, ViewSonic and Wistron, and Samsung, which yesterday became the latest licensee.

Microsoft claims certain Android features contain technologies over which it owns patents, and the fact that two of the largest Android device makers have agreed to pay royalties suggests there is some validity to those claims.

Right now Motorola Mobility is the only major Android smartphone manufacturer in the U.S. without a license from Microsoft, and the two are battling it out in court at the same time that Motorola Mobility is being acquired by Google.

Looking at the bigger picture $444 million represents just a drop in the bucket for Microsoft's yearly revenue, which is expected to be around $75 billion for fiscal 2012. From a strategic point of view, however, the additional cost and legal complexity of Android may chill adoption of the platform, which Google gives away for free, making other mobile operating systems such as Windows Phone 7 more attractive to manufacturers.